The Australian Dollar is in a position to close higher for a third straight session on Thursday after resuming yesterday’s strong performance. This week’s rally began with a closing price reversal bottom and short-covering rally on Tuesday after the ISM US Manufacturing PMI report came in weaker-than-expected, signaling a contraction in the sector and a weakening economy.
On Wednesday, the Aussie was boosted by stronger-than-expected services sector data from China. Today’s strength is being fueled by the announcement of a resumption of trade talks between the United States and China in early October.
At 07:19 GMT, the AUD/USD is trading .6812, up 0.0015 or +0.22%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of a closing price reversal bottom on September 2 at .6688.
The minor trend is up. A trade through .6821 changed the minor trend to up. This also reaffirmed the shift in momentum.
The new minor range is .6677 to .6825, which makes its 50% level or pivot at .6751 minor support.
The main range is .7082 to .6677. Its retracement zone at .6880 to .6927 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this area.
Daily Technical Forecast
Now that the minor trend has changed to up and momentum is trending higher, the direction of the AUD/USD the rest of the session on Thursday is likely to be determined by trader reaction to the previous minor top at .6821.
A sustained move over .6821 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the main 50% level at .6880. This is followed by a downtrending Gann angle at .6912 and the main Fibonacci level at .6927. All three prices are capable of drawing the attention of sellers.
A sustained move under .6821 will signal the return of sellers. Crossing to the weak side of a downtrending Gann angle at .6742 will indicate the selling is getting stronger and could spell the end to the short-covering rally.
This article was originally posted on FX Empire
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